THE Philippine Insurance Commission (IC) should take a closer look at the way foreign reinsurance brokers operate within the country after it was reported that the Financial Conduct Authority (FCA), a UK-based financial regulatory body, is probing five global reinsurance brokers for allegedly sharing sensitive information involving aviation insurance accounts.
The firms reportedly being probed are Aon, the Jardine Lloyd Thompson (JLT) Group, Willis Towers Watson, UIB, and Marsh.
The investigation came barely a few weeks after one of the UK’s non-life insurance companies filed a related complaint against Marsh in the UK High Court in London.
According to lawyer Jose Bernas, who represented the non-life firm, Marsh disclosed highly confidential and proprietary aviation insurance information to the chief executive of a local airline, which indicated a malicious breach of trust.
“What they did was to share competitive cost information in order to besmirch the reputation of my client and to steal business away from them,” Bernas explained.
“I hope that this kind of behavior does not taint the entire industry, because this lack of ethics sets a negative precedent for insurance companies that play by the proper rules. It’s a good thing that the FCA is cracking down on this conduct,” he added.
“By divulging restricted information and poaching insurance clients through this practice, brokers will effectively be underwriting risk and doing insurance business without a license,” he said.
“Even more worrisome is the fact that they will not be responsible for the risks insured,” he said.
Although Marsh has reportedly settled the particular case out of the UK High Court, the FCA insists it is still pursuing administrative violations of insurance industry rules against the brokers.
Apart from their conduct involving aviation insurance accounts, a number of insurers across the world have likewise urged the FCA to investigate other abuses carried out by insurance brokers.